Microsoft to Send Server 2003 to Manufacturers

Microsoft took its Windows Server 2003 code gold Friday, releasing
the code to manufacturers and readying it for the product launch in San
Francisco on April 24.

The new server operating system, previously known as Windows .NET Server,
is one of the cornerstones of Microsoft's .NET strategy -- together with
Microsoft's Office 2003 and Visual Studio .NET 2003 products -- and paves
the way for XML Web services and tightly integrated collaborative
technologies.

Bill Veghte, corporate vice president of the Windows Server Division at Microsoft, said it was the company's best-performing and highest-quality Windows server operating system to date.

"This represents the hard work of thousands of people across Microsoft and thousands of customers and partners," he said. "Windows Server 2003 is the highest quality Windows server operating system ever released."

He added that the platform will allow customers to run their IT infrastructures up to 30 percent more efficiently, noting that 550,000 customers have signed up for preview program betas, the highest number for any server in the history of the company.

"Our mandate was clear: build a customer-driven release that delivers a breakthrough in quality, No. 1 in performance and unprecedented value for businesses of all sizes," Veghte said. "Our early-adopter customers are confirming that Windows Server 2003 is delivering by driving down overall IT costs and providing the highest level of performance and reliability."

Veghte said the product will allow customers to consolidate, reducing the number of servers by 20 to 30 percent, and will drive more efficient management with 20 percent reduction in overall costs. He also said the operating system will allow customers to redeploy 35 percent of IT staffs to higher-value projects, while driving down deployments costs by 50 percent over Windows NT Server 4.0.

The product takes more of an all-in-one approach than previous versions of
the server operating system, which tended to be more specialized for
particular functions. The new software will handle file and print serving,
Web serving and Web application serving, mail serving, directory services,
and streaming media serving. It can also be used as a terminal server,
remote access/virtual private network (VPN) server, Domain Name System
(DNS) server, Dynamic Host Configuration Protocol (DHCP) server and for
Windows Internet Naming Service (WINS).

Windows Server 2003 Enterprise Edition, for multiprocessor servers,
supporting up to eight processors and with features including eight-node
clustering and support for up to 32GB of memory. It is available for Intel
Itanium-based computers and for 64-bit platforms capable of supporting 8
processors and 64GB of RAM;

Windows Server 2003 Datacenter Edition, for high-end servers,
supporting up to 32-way SMP and 64GB of RAM. It provides eight-node
clustering and load balancing services as standard features, and will be
available for 64-bit computing platforms capable of supporting 64
processors and 512GB of RAM;

Another edition, Windows Small Business Server 2003, is planned for release
in the summer.

Microsoft aimed to make this version of its server operating system the
most stable it has ever shipped, and it includes a "No Reboot" initiative,
according to Laura DiDio, analyst with The Yankee Group. DiDio said the
operating system is an order of magnitude more reliable than Windows 2000
Server Service Pack 2. She added that Windows Server 2000 itself was far
more reliable and scalable than Windows NT Server 4.0, with about 60
percent fewer reboots than that operating system.

The product has been years in the coming. Initially, the company scheduled
it for release in the second half of 2001, but it delayed the launch three
times. According to Laura DiDio, analyst with The Yankee Group, the delays
were to fulfill Microsoft's Trustworthy Computing Initiative, announced
in January 2001 in an effort to combat the company's reputation for
making products that were easy targets for hackers. By July 2002, the
company had spent
more than $100 million to go through every line of Windows code in an
effort to make it more secure.

Veghte said that the company has now spent nearly $200 million on the Trustworthy Computing Initiative.

"They will ship no product that is not secure," said DiDio, who added that
the Trustworthy Computing Initiative is very much in evidence at Microsoft.
"That is the main reason that they attributed to the 16 to 18 month delay
in shipping Windows Server 2003."

But while customers have had a long wait for Windows Server 2003, whether
they will upgrade to the new operating system remains up in the air
according to DiDio.

A recently completed Yankee Group Survey, conducted with Sunbelt Software,
found that 34 percent of businesses plan to make the upgrade, but 15
percent have decided to avoid the new operating system and 50 percent have
not yet decided. The survey questioned 1,000 IT managers and chief
technology officers. DiDio said 50 percent of the respondents were in the
small and medium business market (SMB), with between one and 1,000 end
users, and 15 percent came from very large enterprises.

DiDio said that constrained IT budgets have led to three and a half to
four, five or even six year upgrade cycles in many businesses, and many IT
decision makers may decide to try to wait Microsoft out and upgrade with
the next version of Windows Server. That product is code-named Blackcomb,
and is expected in 2005 or 2006.

"Microsoft's biggest competitor in this space right now is itself," she
said.

Of those who do plan to migrate, 7 percent said they will make the switch
as soon as the software ships, 11 percent said within three to six months,
5 percent said within six to nine months, and 14 percent said within the
next 12 months. A further 63 percent said they have no definitive plans to
migrate.

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